Net foreign direct investment in Serbia increased sharply in early 2026, but the rebound leaves the country far below the inflow levels recorded before the 2025 slowdown. Net FDI reached €357 million in January-April, up 81% from €197.3 million a year earlier.
The annual comparison is flattering because the base was exceptionally weak. In the first four months of 2024, Serbia attracted €1.71 billion of net FDI. The 2026 result was approximately 79% lower. It was also 70% below the €1.20 billion recorded in 2023 and 49% below the €699.4 million achieved in 2022.
The figures indicate that the investment cycle has stabilised but not recovered. Serbia remains capable of attracting foreign capital, yet the pace is no longer sufficient to replicate the growth model that financed industrial plants, property development, mining, infrastructure and export capacity during the preceding period.
External conditions explain part of the decline. Germany and Italy, two of Serbia’s principal trade and investment partners, have experienced weak growth. The European Union is projected to expand only 1.1% in 2026, limiting the appetite of European companies for large new production commitments.
Financing conditions have also become more restrictive. International borrowing costs remain elevated, while the Serbian policy rate stands at 5.75%. Projects that were financially viable under lower debt costs now require more equity, stronger offtake contracts or higher expected operating margins.
Energy uncertainty adds a country-specific premium. The unresolved ownership and operating position of Naftna Industrija Srbije affects fuel security, refinery production, inflation and industrial confidence. Investors considering energy-intensive operations must price the risk of supply disruption and higher import dependence.
Domestic political uncertainty, geopolitical pressure and slower EU integration also influence investment committees. These factors may not stop projects already under construction, but they can delay final investment decisions, reduce planned capacity or shift regional mandates towards alternative locations.
The decline in FDI matters because Serbia continues to run a current-account deficit. The deficit stood at €404.9 million in January-April, down sharply from €1.34 billion a year earlier. Net FDI therefore covered approximately 88% of the current-account gap during the same period.
That coverage is considerably stronger than in 2025 but remains incomplete. The National Bank expects the full-year current-account deficit to approach 6% of GDP, reflecting investment imports and stronger disposable income. A wider second-half deficit will require additional FDI, portfolio investment, borrowing or reserve-supported financing.
Serbia enters this period with meaningful buffers. Foreign-exchange reserves reached €29.9 billion at the end of May, while public debt stood at 43.7% of GDP. S&P’s BBB- investment-grade rating supports sovereign and corporate access to capital, although Fitch and Moody’s retain more cautious assessments.
Domestic banks are also providing more capital. Corporate lending increased 12.1% year on year, with investment loans up 15.3% and liquidity facilities up 11.1%. This can support local companies when foreign equity is scarce, but bank financing cannot replace the technology, market access and management capacity that often accompany strategic FDI.
The quality of foreign investment is as important as the volume. Export-oriented manufacturing, processing, R&D, renewable energy and advanced services can improve productivity and the external balance. Property projects and import-dependent construction may raise GDP and employment while contributing less to export capacity.
Energy investment requires a particularly disciplined structure. Wind, solar and battery projects face connection constraints, curtailment risk and different captured-price profiles. Wind generally offers higher capacity factors and a broader hourly production pattern, while solar output is concentrated during increasingly discounted daytime hours.
A project delayed 12-18 months by grid connection or permitting can incur additional interest during construction, contractor claims and lost revenue. Equity returns may fall several percentage points, especially where the original model assumed early access to balancing or high merchant prices. Foreign developers will increasingly require bankable grid rights and credible completion schedules before committing capital.
Industrial projects face comparable evidence requirements. EU-facing investors must plan for CBAM, product carbon data, environmental compliance and supply-chain reporting from the design stage. A lower labour cost is no longer sufficient when European buyers require auditable embedded-emissions information and resilient energy sourcing.
Serbia’s merchandise exports increased 7.7% in January-May, demonstrating that the existing foreign-invested industrial base remains productive. The question is whether new capital will continue expanding that base or whether investment will concentrate in public infrastructure and domestically financed projects.
The international Expo and the associated “Leap into the Future” programme may crowd in private investment by improving transport, urban and digital infrastructure. They may also increase competition for labour, construction capacity and financing. Project sequencing and procurement will determine whether public capital attracts complementary private investment or displaces it.
The 81% FDI increase marks an improvement from the weakest point of 2025, but it does not restore Serbia’s earlier investment intensity. A durable recovery requires lower uncertainty, stronger energy security, competitive financing and a clearer path between imported capital equipment and future export revenue.
